Date: Friday, 27 April 2018
The healthy cash balance was boosted during the March quarter with $3.8 million raised through the exercise of 11.1 million options.
After completing the study phase, Danakali is focused on offtake, funding, operational contracts, operational readiness and corporate social responsibility.
The project is owned by the Colluli Mining Share Company (CMSC), a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO).
During the current quarter, CMSC intends to announce a preferred engineering, procurement, construction and management (EPCM) contractor to manage the project.
A number of EPCM bids were received during the March quarter.
These have been reviewed and evaluated for technical and commercial viability and cost competitiveness in consultation with project management consultant Turner & Townsend.
Negotiations with the preferred EPCM contractor have taken place and management expects to seek board approval this quarter.
Mining will be conducted by mining contractors using conventional methods and mechanised equipment, including surface miners, excavators, bulldozers and haul trucks.
Negotiations with the two shortlisted mining contractors have started, supported by Danakali’s mining consultant, AMC.
Final contract conditions for power provision are nearing completion.
This will follow a Build Own Operate Transfer model, which diversifies project risk by utilising the experience of proven operators.
Danakali continues to liaise with the Ministry of Energy and Mines and the Ministry of Land, Water and Environment on the social and environmental management plans.
An impression of the proposed plant at Colluli.
The company is also progressing its offtake strategy and is working with several offtakers who continue to express strong interest in securing granular and standard sulphate of phosphate product.
Debt funding was initiated in the March quarter through the provision of a Debt Information Memorandum (IM) to potential financiers.
The IM provides detailed project related information and seeks non-binding expressions of interest from potential financiers.
Danakali expects receipt of non-binding expressions of interest in the current quarter.
Key activities planned for June quarter include:
▪ Advance bankable offtake agreements and associated approvals
▪ Selection of the preferred EPCM contractor
▪ Finalise negotiations and advance the contract terms with shortlisted mining contractors
▪ Finalise contract terms for preferred power provider ISI
▪ Continue due diligence process for debt project financing
▪ Materially complete the dual listing on the London Stock Exchange